Why not just build more highways? Unlike passenger rail they don’t need subsidies.

This is the stock-in-trade argument from politicians wishing to burnish their local popularity and taxpayer-value credentials. Such mistaken ideology has dogged intercity passenger rail in Canada for more than half a century.

The truth is that every mode of transportation in Canada receives taxpayer subsidies in one form or another. But it’s very easy to single out passenger railways as it’s common knowledge that they don’t make a profit and, often, incur a substantial financial loss. They exist, in most countries, because they perform a critical public service just like police, education and health care.

In January 2016, C.D. Howe Institute, a centrist Canadian think tank, released an E-Brief on infrastructure investments with a graphic on page 4 showing that in 2013/14 the taxpayer subsidy for Canadian highways was approximately 34%. In other words, licenses, tolls and other costs we pay to use roads only contributed about 66% of the cost of construction and maintenance. See: https://www.cdhowe.org/sites/default/files/attachments/research_papers/mixed/e-brief_225.pdf

In comparison GO Transit recovers about 70% of its operating expenses from the fare box. On a global basis this is considered exceptionally good.

Intercity rail that’s properly planned and run professionally can also achieve very good cost recovery. It is also far more energy and emissions efficient than roads so the environment benefits from substantial reductions in the harmful, social cost of air and water pollution.